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Mothercare to cease all UK trading with loss of 2,800 jobs | Business

Mothercare is to close all of its 79 UK stores and its online business with the potential loss of 2,800 jobs after calling in administrators from PricewaterhouseCoopers on Tuesday.

The administration will not include Mothercare’s profitable overseas operations, which have more than 1,000 stores in more than 40 countries – all run via franchise agreements. Only 50 UK head office staff will remain to deal with running the international business.

The company, which opened its first store in 1961 and has been listed on the London Stock Exchange since 1972, has struggled to compete with cheap supermarket clothing ranges and the rise of online shopping.

Zelf Hussain, the joint administrator and PwC partner, said Mothercare’s stores would be closing over the coming “weeks and months” with the loss of 2,485 retail jobs. The administration also affects 384 head office and distribution staff and there could be further job losses at the retailer’s outsourced warehousing and call centres.

High street closures in 2019

Thousands of high street jobs have been lost this year as a result of high profile retail administrations and thousands more are at risk as Mothercare, Debenhams and Forever 21 prepare for closures. Here are some of the key industry names that have been affected.

Mothercare: Has 79 stores and 2,500 UK retail staff as its British arm prepares to go into administration.

Regis/Supercuts: Had 220 salons and 1,200 staff when it went into administration in October.

Bonmarché: Had 318 stores and 2,887 employees when it went into administration in October. It is still trading as it seeks a buyer.

Watt Brothers: The Scottish department chain had 11 stores and 306 employees when it went into administration in October. All the stores closed and the majority of jobs have gone.

Links of London: With 35 stores and 350 staff, the jewellery chain went into administration on 8 October but its sites are still trading.

Forever 21: Had three stores and about 290 employees in the UK when it went into administration in September. Stores are staying open in order to clear stock.

Albemarle & Bond: Suddenly shut all its 116 stores in September with the loss of about 400 jobs, even though it did not call in administrators. It sold its pledge books to rival H&T in September.

Karen Millen and Coast: Had 32 stores and 177 concessions, employing 1,100 people, when it went into administration in August. All sites were closed and the vast majority of staff made redundant after the brands were bought out by online specialist Boohoo.com.

Jack Wills: Had about 100 stores and 1,700 staff in the UK when went into administration in August. Bought by Sports Direct and 98 stores are still trading in the UK and Ireland.

Spudulike: Closed all 37 stores with the loss of about 300 jobs when it went into administration in August.

Bathstore: Had 132 stores and 529 staff when it went into administration in June. Homebase bought 44 stores saving 154 jobs and the brand now trades from 28 stores.

Select: Had 180 stores and 2,000 employees when the fashion retailer went into administration in May. In June administrators at advisory firm Quantuma carried out a CVA closing 11 stores with the loss of about 200 jobs.

Debenhams: Had 166 department stores and more than 25,000 employees when went into administration in April. No store closed immediately and the chain is now owned by its lenders but two will close before Christmas and another 20 in January when the group completes a rescue restructure expected to result in the loss of 1,200 jobs.

Pretty Green: Had 12 stores and about 170 employees when Liam Gallagher’s fashion outlet went into administration in March. All but one store and 33 concessions closed with 100 jobs lost but 67 saved as the brand was bought by JD Sports in April.

Office Outlet: All 94 stores have closed with the loss of 1,170 jobs after the stationery retailer went into administration in March.

LK Bennett: Had 41 stores and 500 employees when it went into administration in March. The brand was bought by its Chinese franchise partner, Rebecca Feng, saving 21 stores, all the group’s concessions and 325 jobs. But more than 100 jobs lost with the closure of 15 stores.

Patisserie Valerie: Had 200 cafes employing nearly 3,000 people when an accounting scandal prompted the chain to call in administrators in January. About 70 of the group’s 200 stores closed immediately with the loss of 900 jobs. About 2,000 jobs were saved when about 100 Patisserie Valerie cafes were rescued by Causeway Capital, more than 20 of which have since closed. 21 Philpotts sandwich shops were bought by AF Blakemore & Son. and four Baker & Spice cafes a were bought by the Department of Coffee & Social Affairs.

“This is a sad moment for a well-known high street name. No one is immune from the challenging conditions faced by the UK retail sector. Like many other retailers, Mothercare has been hit hard by increasing cost pressures and changes in consumer spending,” he said.

“It’s with real regret that we have to implement a phased closure of all UK stores. Our focus will be to help employees and keep the stores trading for as long as possible.”

Mothercare said it expected its shares would remain listed on the London Stock Exchange and it had sufficient cash resources for the remaining international business to continue trading.

The company added that it was in talks with potential partners to maintain a UK presence by selling its brand via other retailers’ stores or websites and hoped to announce details soon.

Clive Whiley, the chairman of Mothercare, said: “The UK high street is facing a near existential problem with intensifying and compounding pressures across numerous fronts, most notably the high levels of rent and rates and the continuing shifts in consumer behaviour from high street to online.”

He said the administration processes would help build a sustainable future for the wider group’s global operation, its pension fund and lenders.

The international business has lined up additional financing to preserve its future as a solvent group.

A £24m loan will be paid off as part of the administration process and it had raised £5.5m in new loans and £3.2m from a new shares placed with key existing shareholders on Tuesday. The group has also lined up £50m of additional funding from other sources, including a £15m loan from the restructuring specialist Gordon Brothers and a potential additional equity issue which could launch before January.

Contributions to Mothercare’s pension fund, which will be retained by the remaining listed group, have also been reduced for the next 18 months in a deal agreed with the scheme’s trustees and regulators.

Mothercare warned on Monday it was planning to call in administrators, after it became clear the UK business could not return to profitability.

In the 1980s, the British designer Sir Terence Conran merged Mothercare with Habitat and then British Home Stores to form Storehouse, but the group was broken up in 2000 when BHS was sold to Sir Philip Green.

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After acquiring the Early Learning Centre toy business in 2007, Mothercare had more than 400 stores in the UK. It has gradually been shutting UK stores for years and its efforts stepped up dramatically last year when it cut 60 stores through an insolvency process called a company voluntary arrangement (CVA). It sold the Early Learning Centre earlier this year.

Sofie Willmott, lead retail analyst at GlobalData, said: “Mothercare’s fall into administration comes as no surprise following its [CVA] in 2018, profit warning in July this year and its prolonged poor UK performance.

“The retailer has failed to stand out as a specialist destination with new parents turning to competitors that offer a better proposition either in terms of low prices, convenience or service, such as Amazon and John Lewis.

“Its strategy to cull store numbers in recent years and transfer sales online has proved unsuccessful, with digital sales declining as its online offer failed to encourage purchases.”

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